Upmarket residential apartments. [Photo/nairobiwire.com]Prices of luxury houses and apartments in Nairobi shrunk marginally in the first quarter of the year, a Knight Frank Prime Global Cities Index report shows. The report says the city recorded one percent decline in prices between December and March this year, further confirming an earlier Kenya Bankers Association House Index.Supply of high-end homes slightly outweighed demand, mainly due to developers’ response to the upbeat foreign investor appetite in Nairobi in recent years. This is in addition to an expanding pool of local high-net-worth individuals seeking to buy trophy homes.The moderate growth in supply widened the spectrum of options in the niche property market, creating room for price negotiation between buyers and developers unlike initially where homeowners and developers servicing loans were willing to settle for flat price growths in some neighborhoods.Knight Frank country agency head Anthony Havelock said the data going back five years shows the capital has been a star performer globally, with values growing by 20-25 percent annually.Meanwhile, the volume of transactions during the quarter also slackened, largely attributed to security challenges the country is grappling with. Reintroduction of the Capital Gains Tax from January 1 also played a role in the price stabilization as the market awaited clarity from the Kenya Revenue Authority on the enactment of the new law.Knight Frank Kenya managing director Ben Woodhams noted a slowdown in some pockets of the high-end market. The market, he says, is the one whose mainstay is the expatriate community who are now making changes to lifestyle and properties they occupy because of security concerns.Despite the gloomy first quarter, though, Knight Frank expects market vibrancy to pick up in due course, fuelled by inbound investments as multinationals eye opportunities in the extractive industry and the growing aspirational consumer market.

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